Canada’s licensed marijuana producers and applicants soar past 700

(This story has been updated from an earlier version to clarify the breakdown of licenses issued.)

With cannabis legalization around the corner in Canada, more companies than ever are lining up to be licensed producers (LPs).

On top of the 115 companies that have already been granted licenses, 588 applicants were waiting in the LP pipeline as of early August, according to data provided by Health Canada.

Ontario leads the way with 198 applicants, followed by British Columbia (173), Alberta (76) and Quebec (69).

The breakdown of the 115 companies that have been issued licenses (companies may hold more than one type of license) includes:

111 cultivation licenses

62 dried sales (four licenses went to firms/locations that offer only sales)

51 oil production licenses

25 oil sales licenses (three licenses went to firms/locations that offer only sales)

With recreational cannabis sales set to begin Oct. 17, interest in marijuana cultivation licenses has soared. The number of applicants to cultivate cannabis in Canada rose 150% on-year in the first quarter of 2018.

And in July, facilities licensed by the Canadian government to cultivate cannabis surpassed 1 million square meters (11 million square feet) for the first time, according to data from Health Canada.

Experts predict serious competition in the licensed producer space in the coming years, with some forecasting significant consolidation. Others believe companies that fail to distinguish themselves will follow a different path.

“Disintegration happens when people make promises at valuations that can’t possibly be fulfilled, because they have no off-take agreements, they have no chance of doing anything potentially other than building inventory, and probably a third of the money that’s being doled out isn’t actually ever going to turn into any inventory.”

Canadian cannabis companies have gone on a buying spree this year, as capital continues to pour into the sector.

There were 48 deals in the first half of 2018 for a total disclosed value of 5.2 billion Canadian dollars ($3.9 billion), according to a recent report by PricewaterhouseCoopers Canada (PwC).

A report from New York-based Viridian Capital Advisors, which monitors merger and acquisition activity in the marijuana market, Canada-based cannabis companies raised CA$3.2 billion to fund domestic and international expansion plans in the first half of this year.

The backlog is huge and they hired what, 2-3 more people at health canada to process the applications for Licensed Producers. The applications for the micro production and processing facilities aren’t even out yet so that non millionaires can have the right to grow as well. The market should be flooded in producers causing the price of cannabis to crash as quickly as possible. There’s a tremendous amount of crony capitalism that’s happening with the LPs right now. The markup is ridiculous if the supply is already much larger than it was years ago. It’s no wonder they’re not posting impressive sales numbers.

Health Canada processing of medical grow permits has picked up incredibly. Last year it took over five months for my renewal. This year I had my permit in less than a month. I agree the backlog is huge for Legal Producers and their process is painfully slow. Hopefully the craft grower permits will be simpler and quicker. Regardless, the market is changing rapidly and will evolve over the next several years with legalisation. (Yes, we spell “legalisation” with an “s” in Canada and we call it cannabis here, too.)

In any case, self production will be our saving grace until prices come down. Anybody will be able to become self sufficient. And the Access to Cannabis for Medical Purposes Regulations (ACMPR) already allows higher plant counts for medical patients. I will continue to grow my own until the legal pot gets too good and cheap to resist.